The Governor of the Central Bank of Lebanon, Riad Salameh, said that Lebanon has adopted a new official exchange rate of 15,000 pounds against the US dollar, starting from this February, which represents a 90% reduction of the official rate of the currency that has remained unchanged for 25 years.
Despite announcing the devaluation of the currency from the old official price of 1507 per dollar, to 15,000 pounds per dollar, the prices are still far from the parallel market prices in which one dollar is exchanged for 57,000 pounds, according to Wednesday’s trading, according to Reuters.
Analysts expect that this significant change in exchange rates will have a limited impact on the Lebanese economy, which has become largely dependent on dollar transactions, and currency exchange operations are carried out according to parallel market prices and unofficially.
Hassan Mughniyeh, head of the Lebanese Depositors Association, considered that the decision of the Governor of the Central Bank of Lebanon cannot be judged in terms of degrees of correctness and error, as long as “all the decisions taken by the bank were wrong.” He said, “The crisis in Lebanon is not so much technical as it is political.” This has been known for years.
He added that Lebanon lost $24 billion from the obligatory reserve of dollars, while what is in the state treasury does not exceed $10 billion.
Mughniyeh added that the decision taken by the bank’s governor regarding liberalizing the exchange rate of the lira should have taken place a long time ago, stressing that the state has incurred huge financial losses in billions of dollars as a result of not fixing the exchange rate of the lira.
The head of the Lebanese Depositors Association stressed that since 1992, “the financial policy followed in the State of Lebanon has not been studied, and that the Lebanese people are now suffering from the consequences of this failed policy.”
“Nothing in Lebanon today can stop the rise of the dollar except by entering a hard currency parallel to the market in order to curb the exchange rate,” he said.
For his part, financial expert Elie Yachoui considered that the International Monetary Fund has been familiar with the Lebanese economic and financial policy since 1990, but it did not address in any of its annual reports “the deviation of this monetary policy and the role of the Central Bank in its continuity.”
“Neither the International Monetary Fund nor the World Bank asked Lebanon in the past to amend this failed monetary policy, and today, after the collapse of the financial and monetary system, it is asked to fix the situation,” Yachoui added.
The Lebanese financial expert concluded that Lebanon needs to reconfigure its hard currency reserves, in order to achieve financial and economic stability in the country.
He said that Lebanon is in dire need of a new political staff, a new central bank governor and a new political culture, to get the country out of the circle of crisis and corruption, he said.
